Many people open a credit card and are charged fees they did not expect. These new costs can make the monthly payment amount much higher. Here are some common fees to look out for when opening a new card.
Annual Percentage Rate (APR) is the cost you pay each year to borrow money on your credit card. It is the yearly interest you will pay for carrying a balance on your credit card. If you do not pay off your entire credit card bill each month, the credit card company will add a percentage of the amount you owe to your next bill. It is best to pay the entire balance whenever you can, because the APR will increase the amount you owe very quickly.
Other fees to know about:
Late fees. You will be charged a late fee if you do not pay your monthly payment by the day it is due.
Cash Advance Fee. If you borrow cash from your card, the credit card company may charge you a fee in addition to the amount you borrow.
Balance Transfer Fee. Many customers decide to transfer their credit card balances to other cards in exchange for a lower annual percentage rate or other perks. However, credit card companies sometimes charge a balance transfer fee for this. Be sure you are aware what the fee is for transferring, so you can be sure that the transfer is worth it.
Payment Protection charge. Payment Protection is a type of insurance that allows your payment to be paused, with no penalty, if issues like job loss prevent you from paying your credit card. But many people do not realize when signing up for their credit card that Payment Protection has been slipped in, and it will be charged monthly.
When you are signing up for a credit card, remember that it is a financial contract. Ask what fees are involved, and always read that fine print very carefully!